USDA Corn Use Drops Slightly, Brazilian Market Faces Challenges

The USDA reported 460.49 million bushels of corn were used for ethanol production in October, down 0.4% from last year but 3% higher than the previous month. Export inspections for the week ending November 28 totaled 935,859 metric tons, down from both the previous week and the same period last year. However, year-to-date exports are 30.73% higher, the strongest for this timeframe in six years, with Colombia and Mexico as leading destinations.

The Brazilian corn market faces pressure from currency devaluation and rising interest rates. Exporters remain aggressive due to favorable exchange rates, while domestic producers show hesitation in selling amid fiscal concerns and inflation. Producers are releasing stocks to prepare for new harvests, stabilizing prices in certain regions. November exports were significant, and December shipments are expected to increase further, with logistics prioritizing corn over soybeans. The summer corn crop shows strong performance due to favorable rainfall, with early harvests in Rio Grande do Sul likely meeting local demand.

Corn prices faced modest declines due to fund and technical selling. However, demand from feed, fuel, and export sectors remained robust. Weather in South America continues to be a key factor, with rain expected in Argentina and reliance on Brazil’s second crop, which is crucial for exports. Brazil’s 2024/25 production is projected at 121.8 million tons, with 40 million tons slated for export. Argentina’s crop is estimated at 50–51 million tons. Political uncertainties, such as a potential U.S.-Mexico trade war, pose risks to export dynamics.

Delayed Commitment of Traders data showed speculators reduced net long positions in corn futures and options by over 17,000 contracts as of November 26, leaving a net long of 97,442 contracts. Futures prices, influenced by speculation, have diverged from physical market realities, though alignment is anticipated as physical supply meets demand. Logistical adjustments and cautious farmer sales in the U.S. are likely to mitigate downward pressure in the short term.

Corn futures edged higher by 1 to 3 cents per bushel, supported by technical strength from wheat and soybeans and rising crude oil prices, which boost ethanol-related demand. Gains were limited by favorable weather in South America, enhancing crop prospects. By midday Tuesday, March corn futures were up 2 3/4 cents, reaching $4.35 1/4 per bushel. Spot basis bids for corn in the U.S. Midwest were steady to slightly stronger, as farmers limited sales amid stable futures prices. Basis improvements were reported in Illinois and Indiana due to demand from ethanol plants.

Data for Technical Analysis (1H) CFD US Corn Futures - Dec 24 (ZCZ4)

Resistance : 432.65, 432.77, 432.97

Support : 432.25, 432.13, 431.93                         

1H Outlook                         

Source: TradingView

Buy/Long 1 If the support at the price range 431.65 - 432.25 is touched, but the support at 432.25 cannot be broken, the TP may be set around 432.80 and the SL around 431.35, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 432.65 – 433.25, TP may be set around 433.53 and SL around 431.95, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 432.65 – 433.25 is touched, but the resistance at 432.65 cannot be broken, the TP may be set around 432.25 and the SL around 433.55, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 431.65 - 432.25, TP may be set around 431.10 and SL around 432.95, or up to the risk appetite.       

Pivot Points Dec 4, 2024 02:38AM GMT